EURUSD is making new higher highs above 1.22 and has surpassed the 78.6% Fibonacci retracement of the entire decline. This is a promising sign for bulls. Usually if trend were to reverse, price would not retrace this far of the previous move.
Despite the new higher high in price, the RSI is not making new highs providing a bearish divergence. Support is at 1.2050 and as long as we hold above it, trend remains bullish. Below we use the Ichimoku cloud indicator in order to identify key support and trend change levels.
EURUSD is above both the tenkan-sen (red line) and kijun-sen (yellow line) indicators. Price is of course above the Kumo (cloud) and with the Chikou span (black line indicator) above the cloud and above the candlestick pattern. The Ichimoku cloud indicator confirms trend is bullish and there is no sign of trend change or weakness. Support is at 1.2110 and if this level is broken, we should then test the important 1.2050 support where we also find the kijun-sen. If price breaks below the tenkan-sen and the kijun-sen then we should also expect a test of the cloud. Breaking above the Daily cloud was an important win for bulls and the following back test a confirmation of the up trend. A pull back from current levels is justified but still considered as a buying opportunity.
